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Microsoft recovers, competitors surge

Microsoft (Nasdaq: MSFT) shares recovered from early lows Monday as analysts reiterated their ratings and said the fallout from the company's antitrust ruling gave investors a buying opportunity.

After opening down more than 7 percent, Microsoft shares recovered to 89 1/8 by 10:41 a.m. Shares were down less than 3 percent.

On Friday, U.S. District Judge Thomas Penfield Jackson gave Microsoft its latest courtroom setback and ruled the company was a monopolist. The language of the "findings of fact" was harsh and dramatic, but didn't surprise Wall Street.

Damage was also minimized as a host of Wall Street firms stood by Microsoft. Banc of America reiterated its "buy" rating on the stock, Credit Suisse First Boston reiterated its "strong buy" rating and Salomon Smith Barney said it sees weakness in Microsoft shares as buying opportunity Monday. Many analysts expect the trial to drag on through 2002 with appeals.

"We see no impact on Microsoft's revenue or EPS estimates resulting from this ruling," said Chris Shilakes, an analyst with Merrill Lynch, in a report. "First finding goes against Microsoft. Microsoft (surprise) does possess monopoly power in the PC markets."

Shilakes said the trial applies to the "PC-centric world of the 90s," and Microsoft faces much stiffer competition in today's "Internet-centric world."

The consensus view was summed up by Michael McCaffrey, CEO of BancBoston Robertson Stephens, who was quoted by Reuters at a technology conference: "If Microsoft goes down 10 points today, I would say buy it ... Microsoft has an enduring strength," he said.

The stock reaction of Microsoft competitors was much more entertaining Monday.

Linux champion Red Hat (Nasdaq: RHAT) jumped 16 9/16 to 102 1/2, or 19 percent because if Microsoft stumbles Linux could take the operating system throne. Speaking of alternative operating systems, Be Inc. (Nasdaq: BEOS) shot up 3 to 6 13/16, or 79 percent on the Microsoft news.

Even Corel Corp. (Nasdaq: CORL), a Linux play and office software play, was up 13/16 to 7 5/8. Unix and Java cheerleader Sun Microsystems (Nasdaq: SUNW) was up 5 5/16 to 115. Among other rivals America Online Inc (NYSE: AOL), which competes with MSN, was up 2 5/8 to 148 1/8, and software maker Oracle Corp (Nasdaq: ORCL) rose 1 1/4 to 59 15/16.